The
Oil and Gas Revenue Management Act, No. 22 of 2015 came into life on the 4th
of August 2015 after it was successful assented by the then President Dr.
Jakaya M. Kikwete. The Act, generally aims at the establishment and management
of Oil and Gas Fund to provide for the framework for fiscal rules and
management of oil and gas Revenues.
The
Act is a positive step towards Economic Development for all Tanzanians as it
sets a foundation stone towards Oil and Gas Revenue Management for the
betterment of all.
The
Act established several measures and steps for the successful reaching of its
objectives and this includes;
§ The
BOT being the key player in the establishment of accounts and the management of
revenue funds as per Section 5 of
the Act;
§ The
TRA and the TPDC (The state owned
National Oil Company) are set as collectors of Oil and Gas revenues due
to the Government by virtual of the section
6 of the Act; and
§ Establishment
of Oil and Gas Fund which shall consist of the Revenue Holding Account and the
Revenue Saving Account as per section 8
of the Act.
THE
REVIEW
The Act being a stepping stone towards the
establishment of an optimum system of oil and gas revenue management and an
effective legal framework for the same has received positive critics as a
result of non involvement of stakeholders including the regulated personnel
such as Foreign Consortium who as directly involved for investment purpose in
the Oil and Gas sector leave alone the General Public whom in one way or the
other are affected by Oil and Gas key players.
Some of the positive criticisms are as
following;
First
and far most important is on the Oil and Gas Fund itself. Section 8 (3) (a) of the Act provides that one of the Objectives of
the Fund is to ensure that the financing of investment in oil and gas as
guaranteed, this can be interpreted as to mean that Investment in oil and gas
may be eligible to loans and credit facility so as to ensure the positive
growth and development on the oil and gas sector.
In Contrary, Section 11 (a) of the same Act restricts (prohibits) monies
deposited in the Fund being used for providing credit to the Government, Public
enterprises and private sector entities. This contradicts with the general role
and objective of the Fund itself.
The Second area challenged is on the Sources of the Fund itself. Section 9 of the Act did not provide
for all sources of the Oil and Gas Fund and left other sources of Fund including
Capital Gain Tax and Penalties for delays and non compliances of the Act or its
regulations imposed under it[1].
Another area that has faced criticisms
though most legal scholars fear to discuss and open their views against it is
on the Establishment of a Portfolio Investment Advisory Board under section 12 of the Act.
The Board is comprised of 5 members
whom among other requirements are to possess knowledge, Skills and
Experiences in the fields of Financial Investment, portfolio management and
investment law.
Unfortunately as many would have
expected, the entire Board Members are appointed by one Person, “The President”.
This is not only dangerous on question
of accountability of the Board but Truth be told this prevents not only the
independence of the Board but also threatens the legality and accuracy of its
decisions, including but not limited to its role and function as per section 13 of the Act.
In additional to that, According to
the Fiscal Rules as stipulated on section
17 of the Act, specifically, section
17 (c) ( i ) (bb) provided that any amount in Revenue Holding
Account which is in excess of 3% of the
GDP is automatically transferred to the Revenue Saving Account. As an ideal
the provision is correctly set but in practical sense 3% of the GDP cannot be
met now or any future time.
According to the World Bank data base,
Tanzania has experienced a 7% GDP per annum on 2016 alone contrary to a 6.5%
GDP per annum on previous decade[2].
It should be know that the GDP of any country is constantly changing and is not
at a fixed rate.
The legal position taken above defeats
the overall objective of fiscal rules objecting the saving for future use as
provided on section 16 (2) (d) of
the Act.
SUGGESTIONS
In order for the Oil and Gas Fund to
be effective and meet the expected objectives, there is a need to expand the
sources of the Fund by widening the revenue base. Some of the key areas which
were not included as sources of revenue for the fund are fees paid in respected
on licences for production and conduct of Oil and Gas Business.
As provided on EWURA’s 9th Annual Report for the year ended 30th
June, 2015 and published on January 2016, Income from levy and Licences alone
has increased from TZS. 30 Billion
In 2014 to TZS. 34 Billion In 2015
which is an increase of almost 15%
in comparison.[3]
The increment above is a result of
increase in investment in Oil and Gas sector and thus should be included as one
of the Sources of the Fund.
Further to that, there is a need to
increase The Natural Gas Infrastructures so as to attract more investments and
increase the Natural Gas markets this is evidenced on the EWURA’s 9th
Annual Report which provided that, as of June, 30th 2015 on which the
Ministry of Energy and Minerals confirmed the quantity of the discovered gas
(gas in place) amounting to 55.08
Trillion Standard Cubic Feet[4]
However,
with more than enough gas in place there is still an infrastructure challenge
learning the fact that, all Natural Gas infrastructures ends at Dar es salaam
and therefore more investments are required to extend the Pipelines to Tanga,
Morogoro and other regions within a reasonable timeframe.
This
measure has been adopted by our neighbours Mozambique and has been very
successful under the “Virtual Pipeline Project” whereby compressed Natural Gas
(CNG) could be transported consistently to different Municipalities to pave way
for new markets, thus automatically increasing the revenue base.
Prepared by;
Oscar
Oswald M, LL.B (Hons)
[4] Page 36 of EWURA’s 9th
Annual Report for the Year Ended 30th June 2015 (Published on
January 2016)
